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Shanta Gold plans new US$10M placement, secures US$5.3M silver stream

Shanta Gold Ltd.on May 6 announced that it has a plan to raise US$10 million via a placement ofnew shares and that it has secured an approximately US$5.3 million streaming agreementof silver byproduct from its NewLuika gold mine in Tanzania with Silverback Ltd.

It has reached a conditional agreement with the holders of theUS$25 million senior unsecured subordinated convertible loan notes for a subsidiaryto buy back US$10 million of the notes and to extend the term of the remainder bytwo years to April 2019, while increasing the coupon to 13.5% from 8.5%.

Shanta's broker has started a bookbuilding process and will seeksubscribers for new shares at 6.5 pence apiece, a 13.3% discount to the May 5 closingprice. Once the placement is completed, the group will start a non-underwrittenopen offer that will allow eligible existing shareholders to buy additional newshares at the placing price, with the offer limited at €5 million.

The proceeds of the placement and the streaming deal will beused in conjunction with a number of other sources of capital to fund the upcomingCapEx program at New Luika, estimated at US$42.9 million from the second quarterto the end of the year.

Shanta expects its gold output for the current year to be towardthe higher end of the 2016 productionguidance of 82,000 ounces to 87,000 ounces, and it is assessing thecost guidance of US$750 per ounce to US$800 per ounce in light of its positive performancein the first quarter and the year-to-date.

In a separate statement, it noted that Mark Rosslee, who joinedthe company in January 2016, is now CFO, effective May 1. He replaced Eric Zurrin,who had been interim CFO since October2015. Zurrin will assist during a transitional period.